Vodacom outage could spur consumer benefits

The current regulatory situation is messy, says Kathleen Rice, director at law firm Cliffe Dekker Hofmeyr.

The National Consumer Commission (NCC) is in the process of preparing a compliance notice that will pave the way for consumers to claim damages if Vodacom's networks fail again.

However, the notice is focused on network operators' terms and conditions, an area over which the Independent Communications Authority of SA (ICASA) wants to keep control.

The two regulatory bodies are currently sorting out the problem of concurrent jurisdictions, and the Vodacom issue is likely to set a precedent as to which regulator rules the mobile industry, says a lawyer.

If the NCC is successful in enforcing a compliance notice and Vodacom does not win on appeal, the issue will pave the way for more notices to be issued against mobile operators, allowing consumers to claim damages when networks fail, says Kathleen Rice, director of technology, media and telecommunications at law firm Cliffe Dekker Hofmeyr.

Commissioner Mamodupi Mohlala explains that the commission is in the process of preparing a compliance notice to force SA's largest cellular company to amend its terms and conditions to ensure quality of service.

Mohlala explains the terms and conditions need to comply with the Consumer Protection Act (CPA) and guarantee levels of availability. The NCC's notice comes after Vodacom's nationwide network failure on 30 June, which left millions of South Africans unable to communicate.

If Vodacom complies with the notice and does not successfully appeal against it at the National Consumer Tribunal, consumers who sign new contracts – after the amendment of terms and conditions – will be able to claim for down time from the operator, without any debate, says Mohlala.

The amended terms and conditions will not be applied retrospectively, meaning existing Vodacom subscribers will not benefit.

However, before the commission can issue a compliance notice, it will liaise with ICASA, says Mohlala. The CPA empowers the NCC to consult with overlapping regulators, such as ICASA, when carrying out its duties.

ICASA is in the process of applying for certain parts of the consumer protection law to fall under its mandate and not that of the NCC. The regulator wants to handle issues, such as quality of service, and have prepaid SIM cards exempted from the law.

The regulator is happy to leave most contract terms and conditions up to the NCC, barring charging and billing, as the body regulates pricing.

Rice says the current situation is “very messy” as both bodies have jurisdiction over the telecoms sector.

Rice explains this is why ICASA is in the process of signing a memorandum of understanding with the NCC, and is pondering whether to have certain parts of the CPA fall under its mandate.

At the moment, neither regulator can interfere with the other's regulatory processes, which allows consumers to forum shop, says Rice. This could lead to entities being fined twice for the same offence, which is problematic, she adds.

Vodacom's network outage demonstrates the urgency to get a memorandum of understanding in place, says Rice. She adds the issue is likely to set a precedent when it comes to whether the NCC has full power over the mobile operators.

Rice points out that ICASA already deals with consumer complaints. It also has an end-user and subscriber service charter in place, which came into effect in the middle of 2009.

In terms of the charter, operators must file reports every six months showing that their services are available more than 95% of the time, the rate of failed calls does not exceed 3%, and that 90% of all faults are cleared within three days. If they do not meet these requirements, they face fines.

According to Vodacom's compliance report for the 2009/10 year, the latest available, its network was available 99.67% of the time and had an average connectivity failure rate of 1.54% during the period covered in the report.

The network also resolved 89.27% of faults within three days, and the balance within six days.

Vodacom's executive head of media relations Richard Boorman says the company has not received a compliance notice from the NCC. “It's difficult to comment at this stage.

“Customers rightly expect the best possible service from Vodacom and we aim to deliver that. The nature of mobile communications technology is such that we can't guarantee 100% uptime – there are too many outside factors not under our control,” says Boorman.

Boorman adds the network's job is to make sure that if issues do occur, such as cable breaks or electricity outages, the localised impact is minimised and service is restored as quickly as possible.

ICASA is expected to submit a report on the exemption issue to trade and industry minister Rob Davies towards the end of this month. Then the minister will determine which body will handle what and the industry will have clarity.